SBA Proposes to Amend Federal Contracting Preferences for Women-Owned Small Businesses
On March 4, 2010, the U.S. Small Business Administration (SBA) issued a notice of a Proposed Rule entitled “Women-Owned Small Business Federal Contract Program” (RIN 3245-AG06).Under the Proposed Rule, the SBA proposes to implement regulatory changes that will provide preferences for Women-Owned Small Businesses (WOSBs) within the federal procurement system.
The most important changes reflected in the Proposed Rule include:
Identification of 83 industries under the North American Industry Classification System (NAICS) in which WOSB participation is deemed underrepresented (45) or substantially underrepresented (38); and,
Development of regulatory preferences to be implemented in the Federal Acquisition Regulation (FAR) that allow procurements within these identified NAICS to be set aside for WOSBs.
Congress established the WOSB Program as part of the Small Business Reauthorization Act of 2000, which enabled contracting officers to restrict competition in federal government procurements to WOSBs for certain industries to be identified by SBA as reflecting underrepresentation by WOSB participation in federal government procurement in the past.Pursuant to this mandate, the SBA published WOSB Program rules in various proposed and final rules published in the Federal Register on June 15, 2006, December 27, 2007 and October 1, 2008.However, these proposed and final rules either failed to clearly delineate the preferences to be afforded or to clearly identify the industries and the basis for the industries selected for the preferences.The current Proposed Rule withdraws the October 1, 2008 proposed rule altogether, and also maintains portions and proposes changes to the infrastructure developed thus far reflecting the WOSB Program. If this Proposed Rule is adopted, potentially thousands of federal government procurements falling within 83 identified industries may become eligible for restricted competitions that are limited to WOSBs based on a contracting officer’s market research and discretion.Pursuant to the WOSB Program reflected in the Proposed Rule, WOSBs are divided into two categories, Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs) and Women-Owned Small Businesses (WOSBs).To qualify as a WOSB, a contractor must be: (1) a small business as defined under current SBA regulations and (2) not less than 51 percent owned and controlled by one or more women who are U.S. citizens.To qualify as an EDWOSB, the women owners must also be able to demonstrate that they are “economically disadvantaged.”Numerous criteria, restrictions and exclusions apply to the qualification of “economically disadvantaged” under the proposed regulations, which are similar to those that apply to other SBA socio-economic programs.However, the threshold criteria include that a woman owner’s net worth may not exceeding $750,000 dollars, her adjusted gross yearly income averaged over the two preceding years may not exceed $200,000 dollars, and the fair market value of all of her assets may not exceed $3 million dollars.Woman owners availing themselves of WOSB or EDWOSB status will be required to be registered in the Central Contactor Registration system (CCR), and to maintain a self-certification in the Online Representations and Certifications Application (ORCA) indicating the appropriate status.While self-certification will suffice under the regulations reflected in the Proposed Rule, the certification will be subject to potential size status protest from competitors as well as potential SBA eligibility examinations.
Under the proposed regulations, and the FAR implementation that will follow final implementation of the Proposed Rule, significant competitive advantages may attach to EDWOSB and WOSB status for certain procurements in the industries specifically identified by the SBA.Contracting officers may restrict competition to only EDWOSBs if the contracting officer expects, based on market research, that two or more EDWOSBs will submit offers, the contract award price (including options) is not expected to exceed $5 million dollars (for manufacturing) or $3 million dollars (for non-manufacturing), and the contracting officer also expects that the contract can be awarded at a fair and reasonable price notwithstanding limited competition.If a contracting officer does not expect adequate participation by EDWOSBs, but expects adequate participation from WOSBs, the contracting officer may also restrict competition to WOSBs when the remaining criteria exist (i.e., the contract award price is not expected to exceed the designated thresholds and the contracting officer expects a fair and reasonable price).
The regulations to be implemented under the Proposed Rule make clear that there is no priority as between socio-economic programs, such as the WOSB, 8(a), HUBZone, and Service Disabled Veteran programs.Thus, a contracting officer may determine to restrict competition under any one or more of these preference programs when market research reveals potential qualifying contractors.
Comments concerning the Proposed Rule are due by May 3, 2010. If you have questions or concerns regarding how the Proposed Rule may impact your business, or in the event you wish to prepare comments for submission in response to the Proposed Rule, you may contact the Robinette Group PLC at email@example.com for assistance.